CHENG SING KEUNG AND ANOTHER v. CHAN KA HAY AND OTHERS

CACV 326/2021

[2024] HKCA 288

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 326 OF 2021

(ON APPEAL FROM HCA NO 2164 OF 2013)

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D E C I S I O N

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Hon Au JA (giving the Decision of the Court):

A. Introduction

1.  This court handed down its judgment on 28 February 2023 (“the CA Judgment”), allowing parts of the plaintiffs’ appeal.  We further made a costs order nisi (“the Costs Order Nisi”) at [109] and [110] of the CA Judgment as follows:

(1)   Costs of the appeal be to the plaintiffs to be paid by the 1^st, 3^rd, 8^th and 9^th defendants, while the plaintiff shall pay the 4^th defendant’s costs, all to be taxed if not agreed.

(2)   There be no order as to costs in the court below.

2.  By way of summons filed on 6 March 2023 (“the Summons”), the 1^st defendant applies to vary the costs order nisi.

3.  The plaintiffs oppose the application and the parties agree that this application shall be dealt with on paper.  They have respectively lodged their written submissions[1].

4.  This is our decision on the costs order nisi variation application.  This should be read together with the CA Judgment.  For the present purposes, we will not repeat the background, issues and reasons for allowing parts of the appeal, which have been fully set out in the CA Judgment.  We will also adopt herein the abbreviations used in the CA Judgment.

B.      The present application

5.  By way of the Summons, the 1^st defendant asks to vary the Costs Order Nisi to as follows[2]:

(1)   In relation to the costs of the appeal:

(a)  The 1^st defendant shall not be required to pay the costs of the plaintiffs on the Side Gate Issue[3].

(b)   The plaintiffs shall pay the 1^st defendant’s costs on the Main Gate Issue[4], to be taxed if not agreed.

(c)  There be no order as to costs on the Interference Issue[5].

(2)   In relation to the costs of the trial in the court below:

(a)  The 1^st defendant shall not be liable to pay the plaintiffs’ costs of the trial on the Side Gate Issue; and

(b)   The plaintiffs shall pay the 1^st defendant’s costs of the trial.

6.  Mr Tsui, counsel for 1^st defendant, has advanced the following submissions in support of the application.

7.  First, counsel submits that this is a right case where the court in the exercise of its discretion should apportion the costs vis-à-vis the specific issues as identified by the court in the CA Judgment (namely, the Main Gate Issue, the Side Gate Issue and the Interference Issue) because:

(1)   These issues are distinct and the contentions raised by the relevant parties in relation to each of them are also distinct and substantive;

(2)   Significant time and costs had been incurred specifically by the relevant parties in relation to each of these issues;

(3)   The plaintiffs were only successful in two of these issues in the appeal, ie, the Side Gate Issue and Interference Issue, but failed distinctly on the Main Gate Issue;

(4)   In the circumstances, it would be more just and convenient to adopt an issue-based costs order instead of making a global costs order for the appeal and / or the trial.

8.  Second, once an issue-based approach is adopted, then:

(1)   In relation to the Side Gate Issue, which the plaintiffs succeeded in the appeal, since it did not concern and had nothing to do with the 1^st defendant[6], it is only just and fair that the 1^st defendant should not be required to bear any of the plaintiffs’ costs in this respect whether of the appeal or the trial.

(2)   In relation to the Main Gate Issue, as the plaintiffs failed in the appeal, they should bear the costs of the 1^st defendant both in the appeal and the trial.

(3)   In relation to the Interference Issue, although the plaintiffs succeeded in the appeal, they were only awarded with nominal damages since, as held by the court, they had failed to plead the basis of the quantification and adduce any evidence in support of the quantum of damages sought (which were stated to be HK$70,000 in the Notice of Appeal)[7].  In the premises, there should be no order as to costs in the appeal being the normal costs order in such a case: Hong Kong White Book 2024, paragraph 62/3/7; Elpe International (Far East) Ltd v Hewlett Packard Hong Kong Ltd [1993] HKCA 288 at [32] per Bokhary JA (as he then was).  On the other hand, the 1^st defendant submits that he should have the costs of the trial.

9.  In our view, we agree with Mr Tsui’s above submission that this is an appropriate case where it would be just and fair for the court to adopt an issue‑based approach in considering costs.  This is particularly so as:

(1)   The 1^st defendant was not involved in the Side Gate Issue and had not advanced any submissions against the plaintiffs in this respect.  It would thus be unjust and unfair to require him to bear any of the plaintiffs’ cost in relation to this issue.

(2)   The plaintiffs were unsuccessful in the distinct Main Gate Issue, which issue had incurred significant time and costs as the plaintiffs had advanced various substantive grounds and submissions to pursue their case which were all rejected by the court[8].

(3)   The plaintiffs, although successful in the Interference Issue, only obtained nominal damages which they ought to have known as they had never pleaded the basis of quantification and advanced any evidence at the trial to support any assessment of damages.  Notwithstanding this, they still pursued the appeal seeking an order for damages in the arbitrary amount of HK$70,000 without any basis or justification.

10.  We would therefore turn to consider what appropriate costs order should be made vis-à-vis the 1^st defendant after adopting the issue‑based approach.  There are two general sets of costs involved, namely the costs of the appeal and the costs of the trial.  We would deal with the costs of the appeal first.

11.  In relation to the Side Gate Issue (which only concerned the 8^th and 9^th defendants[9]), we agree that it would be unjust and unfair to require him to bear any of the plaintiffs’ costs in the appeal incurred for this issue as it did not concern or relate to him.  He also had not advanced any position or submissions that he supported the 8^th and 9^th defendants’ opposition against the plaintiff under this issue.

12.  Mr Chong for the plaintiffs argued that this part of the Costs Order Nisi should not be so varied as (a) the court should not adopt an issue‑based approach, and (b) therefore the fact that this issue did not relate to the 1^st defendant and that he had taken a neutral stance is a matter of taxation.

13.  We disagree.  For the reasons we have explained above, this is an appropriate case where it is just and fair to adopt an issue-based approach in considering costs.  Once so adopted, it is a matter of principle instead of taxation as to whether the 1^st defendant should be ordered to bear the costs of the plaintiffs in relation to this issue.

14.  In the premises, there should be no order as to costs in the appeal between the plaintiff and the 1^st defendant in relation to the Side Gate Issue.

15.  The Main Gate Issue and the Interference Issue should be considered together:

(1)   The 1^st defendant was involved in both of these issues which he (together with the other Appeal Defendants) opposed the appeal thereto.

(2)   Although it is correct that the plaintiffs lost in the Main Gate Issue (which involved more significant time and costs), they were successful in the Interference Issue with nominal damages awarded.

(3)   In this respect, we should mention that we reject Mr Chong’s argument that under the Interference Issue, the plaintiffs should be entitled to costs instead of no order as to costs since he only accepted the grant of nominal damages to save costs and time.  As reflected in [106] of the CA Judgment, we granted nominal damages because the plaintiffs had advanced no basis (by way of pleading or evidence) to say how and why they should be entitled to damages in the amount of HK$70,000 as sought in the appeal or any other sum.  Mr Chong simply had no answer to this.

(4)   On the other hand, to reflect the position that the plaintiffs were indeed the winner in one of these two issues and they could only achieve that by having to bring the appeal, it would be unfair and unjust in all the circumstances to require them to pay the 1^st defendant’s costs under the Main Gate Issue and have no order as to costs under the Interference Issue.

(5)   In our view, taking the overall fairness into consideration, the just costs order would be that there be no order as to costs between the plaintiff and the 1^st defendant under the Main Gate Issue and the Interference Issue.

16.  In the premises and for all of the above reasons, we will globally order that there be no order as to costs between the plaintiffs and the 1^st defendant in the appeal, and the Costs Order Nisi should be varied to that extent.

17.  Insofar as the costs of the trial is concerned, a fortiori for the same above reasons, the fair and just orders between the plaintiffs and the 1^st defendant should also be no order as to costs.  We will therefore not vary the Costs Order Nisi made in relation to the court below.

C.      Disposition

18.  We allow the 1^st defendant’s costs variation application to the extent that there be no order as to costs between the plaintiffs and the 1^st defendant in the appeal.  The rest of the Costs Order Nisi as between the plaintiffs and the 1^st defendant shall be made absolute hereby.

19.  As the 1^st defendant is partially successful in this application, we further order that the plaintiffs shall pay the 1^st defendant one-third of his costs of this application.